- Weekly mortgage applications fell to their lowest since 1996 as a brutal 2022 for the housing market came to a close.
- The Mortgage Bankers Association also said refinancing activity fell 16.3% at the end of December.
- The 30-year fixed rate mortgage showed signs of reheating as it climbed to 6.58%.
Mortgage demand in the US rounded out a rough 2022 with a double-digit weekly slump as borrowing rates for homes proceeded to re-accelerate, Mortgage Bankers Association said Wednesday.
Applications for mortgages fell by 13.2% in the week ended December 30 from two weeks prior, hitting their lowest since 1996, the industry group said. It noted its survey results included adjustments to account for the year-end holidays.
Refinancing demand fell 16.3% from two weeks prior and was also lower by 87% than the same week one year ago.
The readings come as the key rate for home loans has started to push higher, reversing course from a recent downward slope. The average 30-year fixed rate rose to 6.58% from 6.34% two weeks earlier.
Housing market activity tends to slow down at year’s end, but 2022 ended with a thud amid the threat of a recession looming, said MBA.
“Purchase applications have been impacted by slowing home sales in both the new and existing segments of the market. Even as home-price growth slows in many parts of the country, elevated mortgage rates continue to put a strain on affordability and are keeping prospective homebuyers out of the market,” Joel Kan, MBA’s deputy chief economist, said in the report.
The average 30-year fixed mortgage rate hit a 21-year high of 7.16% in late October, then pulled back a bit. But they are still well above the 3.5% seen during the last week of 2021 as the Federal Reserve raised the fed funds rate from zero to 4.25%-4.5% to combat hot inflation, with more rate increases expected in 2023.
“Mortgage rates are lower than October 2022 highs, but would have to decline substantially to generate additional refinance activity,” said Kan.